AFTER 25 years in global transport and a decade focused on logistics decarbonisation, it is become clear the sector's biggest challenge isn't technology, fuel availability, or even investment. It is data.
Australia's mandatory climate-related financial disclosures begin from FY27, requiring large entities to report Scope 3 emissions — the indirect emissions generated across their value chains. For most businesses, supply chain and logistics represent the largest share of that Scope 3 footprint, often 11 to 26 times greater than their direct operational emissions.
This should be a moment of significant opportunity for the logistics sector. Better emissions data should mean better-informed investment in fleet transitions, modal shifts, and network optimisation. It should drive collaboration between shippers and carriers.
It should create the business case for the operational changes the sector has long advocated for. Instead, we have a measurement problem that is quietly undermining the entire process.
One of the most common methodologies used to estimate logistics emissions within corporate carbon inventories is the spend-based proxy approach permitted under the GHG Protocol's Scope 3 guidance. In simple terms, it takes the dollar value of freight spend and multiplies it by sector-average emission factors to produce a CO2e estimate.
It was designed as a practical starting point — a way for organisations to establish a directional view of their logistics footprint when detailed activity data wasn't readily available. And for that purpose, it was reasonable.
The problem is that a decade on, this starting point has become stuck practice. And the gap between what spend-based proxies estimate and what activity-based analysis reveals can be as high as 70 per cent.
That's not a rounding error. That's a fundamental misrepresentation of where emissions sit, how they're distributed across a transport network, and where the reduction opportunities are to be found.
A spend-based approach cannot distinguish between an efficient, high-utilisation direct service and a half-empty vehicle on an indirect route — because both are simply dollar values multiplied by the same emission factor. It can tell you roughly how large your logistics footprint is. It cannot tell you how to reduce it.
The distortions go further. Because the methodology ties emissions to cost, the same transport task — same origin, same destination, same volume, same vehicle — can produce a different emissions figure simply because of a pricing variation. This is compounded across freight networks where lane pricing varies significantly based on factors that have nothing to do with emissions: backhaul availability, regional labour costs, seasonal demand, and competitive dynamics.
Put simply, a freight lane into a remote location may cost more than the same distance into a major capital city. Under spend-based methodology, it also "emits" more. That is not how emissions work.
We saw this play out most starkly during the pandemic, when international freight rates moved dramatically while the underlying transport task — the vessel, the route, the container — remained largely unchanged. Under a spend-based model, a shipper's reported logistics emissions could have doubled or tripled overnight, not because they moved more freight or moved it less efficiently, but because the market repriced. Emissions should not be a function of freight market volatility.
This is not a technical nuance. It is a structural flaw in how the sector is building its understanding of where logistics emissions actually sit — and it has direct implications for where decarbonisation investment is being directed.
The data needed to build an accurate, actionable picture of logistics emissions already exists within most supply chains. Consignment volumes, origin-destination pairs, carrier allocation, mode splits, load factors, vehicle types, route structures — this is standard operational data that supply chain teams work with daily.
When this data is coupled with appropriate emissions modelling — using carrier-specific or mode-specific factors rather than sector averages — the picture changes dramatically.
Hotspots emerge. Inefficiencies become visible. The difference between a 40 per cent loaded road service and a consolidated rail movement becomes quantifiable in both cost and carbon terms.
This isn't theoretical. We've seen it repeatedly across engagements where we've moved clients from spend-based estimates to activity-based analysis. The headline number changes.
The distribution changes. And critically, the investment priorities change.
The current market structure has created an unintended gap. Environmental consultancies have built strong relationships with corporate sustainability teams and are well positioned to manage carbon inventories, reporting frameworks, and disclosure obligations.
What they typically lack is operational logistics expertise — the ability to interrogate freight data, understand network design trade-offs, and identify where modal, routing, or consolidation changes would deliver genuine emission reductions.
On the other side, supply chain consultancies and logistics practitioners have deep operational knowledge and access to exactly the data needed, but have largely not been part of the emissions conversation.
The result is a process that produces reports that satisfy compliance requirements but provides limited operational insight. And a transport sector that is expected to decarbonise but is given little meaningful data or direction to inform how.
This isn't about assigning blame. The GHG Protocol's spend-based approach was a pragmatic solution for its time. Environmental consultancies are doing what the framework asks of them. But the framework was designed for energy and industrial emissions, not for the complexity of logistics networks. And the market hasn't yet adapted to close that gap.
The timing makes this urgent. Mandatory disclosure from FY27 means the numbers will be scrutinised by auditors, investors, and regulators — not just sustainability teams. Billions are flowing into decarbonisation infrastructure, fleet transitions, and green corridor initiatives. If the foundational emissions data guiding those investments is materially inaccurate, there is real risk of capital being misallocated.
And when those investments start delivering measurable results — or fail to — the accuracy of the baseline data will be the first thing questioned.
There is a significant and largely unoccupied space for supply chain professionals to step into this conversation. Not to replace environmental consultancies, but to provide the operational data layer that their reporting frameworks currently lack.
This means combining an understanding of logistics flows, network structures, and carrier economics with emissions modelling capability and sufficient carbon literacy to engage credibly with sustainability teams and auditors.
For the supply chain consulting sector specifically, this represents a genuine new revenue stream. The firms that build this capability early will find themselves advising on both the operational and environmental dimensions of their clients' supply chains — a position that is increasingly difficult to serve from either discipline alone.
The shift from spend-based estimation to activity-based measurement in logistics emissions is inevitable. The question is whether the industry moves proactively — building the data foundations now while there is time to do it properly — or reactively, when audit scrutiny and investment performance force the issue.
For shippers, it means asking harder questions of the emissions data they're being presented and understanding the difference between a compliance-grade estimate and an operationally useful analysis.
For the transport sector, it means recognising that better data isn't just a reporting exercise — it's the basis for making the commercial case for the operational changes that decarbonisation requires.
And for the consulting market more broadly, it means acknowledging that logistics decarbonisation sits at the intersection of two disciplines that have historically operated in silos — and that closing that gap is where the real value lies.
The data to do this properly already exists. It's sitting in supply chains right now. The question is who's going to surface it.
This article appeared in the February | March 2026 edition of DCN Magazine